London is known for its abnormally high rent prices, both in the city and its surrounding suburbs. In the past year alone, private rental prices in England have risen by 6.2%, with London rent being the highest at 6.9% and the North Eastern region seeing the lowest growth rate at 4.7%.
To reduce the costs that tenants are required to pay prior to, and throughout, their tenancy, the government has introduced the Tenant Fees Ban Act 2019. In effect, since June 1st, 2019 the act outlines a list of fees that landlords can charge their tenants, and any fees that aren’t mentioned are prohibited.
If you’re a property owner who doesn’t want the hassle of keeping up and ensuring compliance with regulations like the Tenant Fees Ban Act 2019, contact Habitare. We’re a block property management company and can help you stay compliant with your rental agreements and maintain positive tenant communication. We also offer complete property management services.
Tenant Fees Ban Act 2019: Overview
The Tenant Fees Ban Act 2019 was introduced to curb unfair rental price increases and offer transparency to both landlords and renters. In some areas of London, before the introduction of the Tenant Fees Ban Act 2019, renters would end up paying a surcharge of over £300.
This ban is only applicable to residential rental properties and not commercial properties. As a landlord, you need to comply with the regulations of the Tenant Fees Ban Act if you offer the following kinds of rented accommodation:
- Assured shorthold tenancies
- Student accommodation tenancies
- Licence to occupy housing accommodation
The tenancy fee ban has many advantages for renters. From a landlord’s perspective, it can help you clearly communicate with a potential tenant regarding your property renting cost. The downside is that if you’re using a letting agent to rent your property, it’ll be your job to pay them, as letting agent fees can’t be charged to tenants under the new rules.
You might also need to cut back on property maintenance because the checkout fees have been abolished. So, unless your property is extremely damaged, you can no longer levy a charge from your renter.
What Fees Can a Landlord Charge a Tenant?
From a legal standpoint, what fees can a landlord charge a tenant under this new act?
Schedule 1 of the Tenant Fees Ban Act 2019 specifies the permitted fees that the property owner can charge a renter. This includes:
- Rent
- Tenancy deposit, (a maximum of five weeks’ rent)
- Rental holding fee, which can’t be more than a week’s rent worth
- Late rental payment fee if the tenant doesn’t pay rent 15 days after the due date (interest of 3% above the Bank of England base rate can be charged)
- Termination fee if the rental agreement is terminated before the predetermined date
- Council tax fees
- Cost related to change in tenancy terms in the middle of the agreement tenure
- Utility fees related to energy bills, TV subscriptions, water and gas bills, and broadband fees
There’s one exception to be aware of: if the annual rent amount is over £50,000, then a six-week security deposit can be levied. However, for these fees to be implemented, you need to explicitly mention this in the rental agreement.
As a property owner, you can also levy a charge for replacing a lost key, as long as you have a valid receipt from an authorised locksmith as proof of your purchase cost.
Which Fees Are Banned?
As well as what you can legally charge, it’s important that you’re aware of which tenancy fees are banned.
The fees that landlords can no longer charge their tenants are:
- Property viewing fees
- Any third-party fees
- Checkout fees, including a property check carried out by professionals when a tenant vacates the property after the rental tenure is over to ensure that there’s no damage and that it’s left in the same condition
- Landscaping or gardening fees
- Administrative fees, such as background checks and credit checks of a potential tenant
What are the Consequences of Non-Compliance?
As a landlord, if you charge any fee that’s banned under the Tenant Fees Back Act 2019, you can be fined up to £5,000. Repeat offenders can be charged as much as £30,000.
If a tenant feels that they have been wrongfully charged a fee, they can report you, the landlord, to the local Trading Standards Office via the Citizens Advice website.
Contact Habitare for Complete Property Maintenance
If you’re looking for complete property management, connect with us at Habitare. Our experts can handle every aspect of your duties as a landlord, including ensuring you stay compliant with the Tenant Fees Ban Act 2019.
We can help you understand which fees you can legally charge your tenant, and the situations in which you can charge them. Our on-site property managers will ensure all repair and maintenance work is documented, including costs, so you have proper proof of receipt. Proper record keeping will also help you during the annual rental income tax filing.
To know more about how we can support you as a landlord, contact us today.